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“NEW YORK (CNNMoney) — Credit rating agency Standard & Poor’s downgraded the credit rating of the United States, stripping the world’s largest economy of its prized AAA status.

Last month, S&P warned it was placing the United States’ sovereign rating on “CREDIT WATCHwith negative implications” as the debt ceiling debate devolved into partisan bickering.

To avoid a downgrade, S&P said the United States needed to not only raise the debt ceiling, but also develop a “credible” plan to tackle the nation’s long-term debt.

“The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government’s medium-term debt dynamics.”